Welcome to our latest mining market update. This issue covers everything from the Federal Reserve's sophisticated monetary policy to major Bitcoin ventures, highlighting a period marked by stable interest rates, shifting inflation dynamics and significant investment actions that are strengthening Bitcoin's robust foundation.
As we dissect these developments, we want to provide you with keen insights and strategic foresight. Let's dive into the latest crypto market news from the past two weeks!
Table of contents
Summary:
- FOMC meeting maintains interest rates: The Fed keeps interest rates steady, reflecting a cautious approach by Jerome Powell.
- Market predictions after the meeting: The market generally expects interest rates to remain constant at the next FOMC meeting.
- Inflation trends in the U.S.: In the U.S., inflation falls from a peak of 9.1% to 3.1%.
- Euro zone parallel inflation rate: Like the US, the euro zone had high inflation.
- Bitcoin's appeal against inflation: The current economic landscape reinforces Bitcoin's position as a hedge against inflation.
- Bitcoin acquisition by MicroStrategy: MicroStrategy buys another 9,245 BTC, making its total holdings more than 1% of the total Bitcoin stock.
- Hamas and false reporting on cryptocurrency: Tom Emmer corrects false allegations by the WSJ about Hamas's use of cryptocurrency.
- Technical analysis Bitcoin: Bitcoin stabilizes at ~$65,000 after a pullback, with support levels at $62k and $52k.
- Bitcoin supply dynamics: Quantity of Bitcoin on exchange lowest in 8 years.
Opportunity for Bitcoin miners: The past period has been very profitable for Bitcoin miners, with price increases outpacing the rise in mining difficulties.
Bi-Weekly Market Changes 10 - 03 / 23 - 03
News
FOMC meeting: interest rates remain constant
At its last meeting on Wednesday, the Federal Reserve opted for stability and held the Federal Funds Rate steady. This reflects a cautious stance by Jerome Powell, the Fed chairman. This decision reflects the lessons of 2021 and 2022, when Powell was criticized for keeping interest rates close to zero for an extended period. Powell showed a proactive approach and hinted that he might cut interest rates before there was any visible deterioration in the labor market, indicating a shift to more dynamic economic stewardship. With the announcement that interest rates are likely at their peak and nearing the end of deleveraging, the market reacted positively and did well for both risk assets and short-term government bonds.
The market currently expects an 87.7% chance that interest rates will remain unchanged at the next FOMC meeting on May 1. A smaller portion, 12.3%, expects a cut and no one expects an increase. This consensus indicates a market bracing for stable, albeit cautious, monetary policy in the near term.
The Eurozone shows a similar story, with inflation peaking at 10.2% and then falling to 2.8%, slightly below the U.S.'s 3.1%. A €10,000 investment would now equate to about €8,324, after adjusting for three years of inflation. This parallel between the two major economies shows that no matter whether you save in euros or dollars, you are never safe from inflation in a government-controlled, printed currency.
These developments have major implications for Bitcoin, which is increasingly valued as a safe haven against inflation. With traditional currencies vulnerable to inflation, Bitcoin's attractiveness as a hedge against inflationary pressures becomes even greater.
Michael Saylor on ongoing bargain hunt for Bitcoin
MicroStrategy continues its bullish journey and made a significant purchase of 9,245 BTC on March 18. This purchase, expected since the announcement of the issuance of more convertible bonds, propels their total Bitcoin holdings to approximately 214,246 BTC. With this, MicroStrategy has reached a monumental milestone: it now owns more than 1% of the total Bitcoin stock that will ever exist.
Michael Saylor, the driving force behind MicroStrategy's aggressive Bitcoin strategy, remains unfazed by the volatility and high buying points and emphasizes a long-term view for their investment. Saylor's approach is rooted in a deep belief in the intrinsic value of Bitcoin and its burgeoning potential as the network expands. His reasoning is simple but profound: despite buying at what many consider "the top," Bitcoin's fundamental value, combined with its increasing size and acceptance, solidifies Bitcoin's position as a resilient long-term asset. Saylor will continue to buy the top, as he says in the video below.
Hamas does not use crypto as Wall Street Journal claims
In a recent interaction with the head of Treasury's Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), Congressman Tom Emmer addressed concerns about Hamas' false adoption of crypto use, as reported by the Wall Street Journal.
Emmer revealed the inaccuracies in the WSJ report and clarified that cryptocurrencies are not a common tool for Hamas' fundraising activities. Crypto is not the preferred way of trading for Hamas. The number one currency for buying weapons in the world is still the U.S. dollar.
Technical analysis
Bitcoin loads up for another ATH
After reaching new all-time highs and the subsequent pullback, Bitcoin now stands comfortably at around $65,000. In the broader perspective, this pullback is insignificant. The market remains overwhelmingly bullish and such pullbacks are beneficial because they prevent the buildup of excessive leverage.
We have identified support levels at $62k and $52k, which offer excellent buying opportunities should the price reach these points.
In addition, the Relative Strength Index (RSI) has cooled off from overbought territory. If we experience a further pullback and stabilize at these levels for a while, investors can get used to Bitcoin's new high prices, build more demand and then we will be ready for the next all-time high!
Blockchain analysis
Percentage of Bitcoin on Exchange Declines
In recent years, the amount of Bitcoin available on exchanges has consistently decreased, to a point that we have not seen in the past eight years as a percentage of total supply. This significant decline in supply on Bitcoin exchanges is a very positive indicator, indicating that investors are increasingly inclined to hold onto their Bitcoin and have no intention of selling.
As available supply diminishes and demand continues to grow, we are paving the way for a future supply crunch. Such a scenario, where Bitcoin supply dries up while demand remains high, will lead to a parabolic price increase.
Many profitable wallets but don't panic
The chart above shows that many addresses are making gains, even in the red zone. Normally, this situation calls for caution. But as we saw during the 2017 bull market, the red zone - indicating that many accounts are profitable - was reached several times before the down market began. A similar pattern emerged in 2021. Therefore, it is important to be cautious when this area is hit repeatedly. Still, current indications suggest we can expect more gains.
We have also found that buying at times when many are taking losses often proves to be a wise decision, acting as a definitive buy signal. For now, we can enjoy the journey to the next all-time high. Remember, paying attention to these patterns can offer valuable insights into market trends and potential turning points.
Bitcoin Mining
Good times for miners: Bitcoin rises faster than difficulty
The past 90 days represented an ideal scenario for Bitcoin miners. The price of Bitcoin rose about 53% and outpaced the growth of mining difficulty by about 21%. This creates a very lucrative situation for miners because the cost of mining (represented by the difficulty rate) rises much more slowly than the price of Bitcoin, significantly increasing profit margins.
Such periods are rare because of the almost constant increase in the difficulty of mining, making the current time a golden opportunity for those in the mining industry. The key to maximizing profits lies in how quickly the price of Bitcoin can escalate, often driven by a surge in demand versus a relatively steady supply.
Increasing mining difficulty, on the other hand, requires the development of physical infrastructure and is inherently slower. Current miners can therefore enjoy the additional profits from their operations.
Wishing you a good week and keep those mining rigs running!
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